In North America, solar PPA prices rose 4% as tariffs and looming tax credit deadlines raised costs, according to LevelTen Energy
In Europe, prices fell 2.4% amid weak demand and growing instances of solar price cannibalization
Hybrid PPAs and data center demand are emerging bright spots amid mixed regional dynamics
Solar power purchase agreement (PPA) prices during Q3 2025 rose by 4% quarter-on-quarter (QoQ) in North America, but dropped by 2.4% in Europe, according to the renewable energy transaction platform LevelTen Energy.
The company aggregates PPA price data in percentile buckets, where P25 refers to the most competitive 25th percentile offer price.
Developers in the North America market rush to begin construction on as many of their projects as possible before the July 4, 2026, deadline to claim tax credits under the One Big Beautiful Bill Act (OBBBA).
“But as potent of an impact as tax credit clawbacks pose to PPA pricing, the most prominent driver of Q3's PPA price increases came from elsewhere: a range of tariffs that have taken effect on steel, aluminum, copper, and more — pushing up prices for solar developers, and the EPC firms they partner with,” observes LevelTen.
In North America, the P25 solar PPA price increased to $59.77/MWh compared to $57.55/MWh last quarter (see Q2 2025 Solar PPA Prices: Up In North America, Down In Europe).
The price for wind PPAs also rose to $74.69/MWh, an increase of nearly 5% QoQ due to policy headwinds in the US.
The US solar sector is facing rising costs due to new tariffs on metals, minerals, and key components. The ongoing trade investigations into imports from countries like Laos, India, and Indonesia are likely to contribute to the increase. These measures, combined with stricter compliance rules such as the Foreign Entity of Concern (FEOC) regulations, are pushing project development costs higher. As a result, developers and buyers are adding flexible pricing terms to PPAs to share risks and adjust prices when costs change.
Analysts point out, “As time progresses, risks related to pending FEOC rules will add to development costs, and of course, only a limited number of planned projects will be able to begin construction in time to secure tax credits — without which, PPA economics will move into unknown, and undoubtedly more expensive, territory.”
Europe, on the other hand, had a consecutive quarter of price decrease, as solar prices dropped by 2.4% to €58.21/MWh, compared to last quarter’s €59.62/MWh, as demand continues to lag behind supply. Additionally, there are rising instances of solar price cannibalization in several countries vis-à-vis low and negative wholesale prices. This is leading to depressing revenue expectations for standalone solar assets in several markets, including Germany and Spain.
Irish solar PPA prices remain the highest in Europe, but growing data center demand could boost buyers, according to the analysts. In France, solar PPA prices fell slightly as policy uncertainty pushes more developers and buyers toward PPAs, which also increases the uncertainty for the country’s support for renewables in the near future.
The UK renewables market has gained some certainty as the government has agreed to adopt a single national price for electricity.
Wind energy prices remain steady as these declined by 0.1% QoQ. Unlike the US, the European wind energy sector is regaining momentum, as per LevelTen Energy.
Europe’s PPA market currently has plenty of supply, note the analysts. As more Eastern European countries join the AIB system for Guarantees of Origin, corporate PPA opportunities are set to grow. There’s also a rise in hybrid PPAs combining solar or wind with battery storage.
While overall energy demand is weaker than expected, data centers in countries like Finland, Spain, and Ireland are driving strong growth. With stable market conditions now, buyers are advised to take advantage to secure their energy and sustainability goals, it recommends.
The complete Q3 2025 reports for both markets are available only to LevelTen Energy’s subscribers. It, however, provides a free executive summary on its website.
